Twiggy backs John Hancock in Rinehart dispute

Gina Rinehart and Andrew Forrest at an anti-tax rally in 2010. Forrest has written a character reference for John Hancock to replace his mother as trustee of the $5 billion family trust, the NSW Supreme Court heard on Tuesday.
Photo: Rob Homer

by
Hannah Low and Jonathan Barrett

Tension between the nation’s two wealthiest mining magnates has flared up over the battle for control of the ­multibillion-dollar Hancock empire, with Andrew Forrest emerging as an advocate for John Hancock, the estranged and only son of Gina Rinehart.

The revelation, on Tuesday afternoon, that Mr Forrest, the chairman of Fortescue Metals Group, would support John Hancock in his bid to become trustee of a $5 billion family trust that controls 23.4 per cent of flagship company Hancock Prospecting, adds to the years of bitterness between the two mining houses.

Mr Forrest has declared his support for Mr Hancock in a sworn affidavit, the NSW Supreme Court has been told. Ms Rinehart’s lawyers are expected to object to this. The affidavit had not been read out or made public.

It is not known when the tension between the two billionaires began, however The Australian Financial Review reported that, in 2005, Ms Rinehart allegedly refused to let her son accept a job with Fortescue Metals.

John Hancock is sueing his mother Gina Rinehart for control of his share of the family trust.
Photo: Frances Andrijich

Forrest offered Hancock a job and stake in FMG

In a meeting held over Mr Forrest’s kitchen table, Mr Hancock was offered a job to become a founding employee to oversee marketing operations in places such as China, as well as taking a 1.5 per cent stake in Fortescue. That holding, if it hadn’t been diluted or sold down over the years, would now be worth more than $220 million.

After 2005, the competing interests of Mr Hancock and Fortescue became very personal. Fortescue’s strategy of lodging exploration tenement applications across the Pilbara en masse, included marking out very prospective territory on Ms Rinehart’s ancestral home and pastoral station, Mulga Downs. The station is home to several thousand cattle and the ashes of Ms Rinehart’s father, Lang Hancock. She fought Fortescue on most, if not every application.

Analysis of mining tenements across the Pilbara shows Fortescue has marked out more ground on Ms Rinehart’s 356,000 hectare ­station for exploration and iron ore extraction than any other company. On one granted mining lease, numbered M45/1138, which is wholly situated on Mulga Downs, Fortescue has spent $37.6 million over the past three financial years preparing for an iron ore mine.

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Long history of dispute over exploration tenements

The tenure and expenditure is linked to Fortescue’s existing Cloudbreak mine operations. It has a granted 21-year term over the land so long as various conditions, such as minimum expenditure requirements, are made.

A defence strategy employed by Mrs Rinehart’s lawyers has been to allege that Fortescue did not have the financial clout to explore and turn farmland into mines.

In a dispute that spilled into the state’s Mining Warden court in 2009, Hancock Prospecting argued
Fortescue
did not have the finances to “effectively explore the land" it had marked on Mulga Downs.
Ms Rinehart’s
company called for a full review of Fortescue’s accounts.

In a separate dispute that year, Ms Rinehart personally objected to Fortescue’s mining lease application over a 1486-hectare plot on Mulga Downs that threatened the quality of stock water and would arguably interfere with farming.

Ground has been given both ways in the numerous disputes, although invariably the miner’s right to explore has won over the pastoralist’s right to maintain the status quo.

The NSW Supreme Court was due on Tuesday to begin adjudicating the dispute between Ms Rinehart and her two eldest children, John and Bianca, over management of the family trust set up by their grandfather Lang Hancock. The children argue their mother did not act in the best interests of the beneficiaries and deliberately deceived them.

Forrest agreed to a request for a character reference

The dispute erupted two years ago, days before youngest daughter Ginia was to turn 25 and the trust vest. Mrs Rinehart told her children they would be bankrupted due to capital gains liability if they did not extend the trust and grant her further powers.

On Tuesday morning, Christopher Withers, barrister for John Hancock and
Bianca Rinehart
, heard a proposed replacement trustee had been put forward overnight by Ms Rinehart, her youngest daughter
Ginia
and Hancock Prospecting. Mr Withers said the suggestion had some problems and some “utility" and asked for “some time to have those discussions."

The negotiations continued into the afternoon and the case will return to court on Wednesday.

Mr Withers told the court if no resolution had been reached by Wednesday pre-trial issues would need to be determined, including whether Mr Forrest’s affidavit can be admitted into evidence.

Mr Forrest agreed when asked to give a character reference for John. The two have known each other for over a decade.

If no agreement is reached then it will be left to the court to appoint a new trustee. Once that happens, Mrs Rinehart could also face investigation by the replacement trustee over her decision to decrease the trust’s holding in Hancock Prospecting to 23.4 per cent, and move the giant Hope Downs mine, which is being jointly developed with Rio Tinto, from the trust to the company.